It could be payback time.
An expensive legal and political campaign last year by Microsoft helped delay completion of Google’s $3.1 billion bid for the online advertising company DoubleClick. Microsoft filed briefs against the deal in the United States and abroad, testified against it in Congress and worked with a public relations firm to generate opposition.
Now Google is preparing to strike back.
With Microsoft bidding nearly $45 billion to buy Yahoo, Google has begun to lay the groundwork to try to delay, and possibly derail, any deal. Google executives have asked company lobbyists to develop a political strategy to challenge the acquisition, which could threaten Google’s dominance of Internet advertising. Google’s top legal officer posted a statement this weekend that criticized the proposed deal.
Spokesmen for the two companies in Washington declined to comment Monday about a looming legal and political battle, which has yet to fully emerge and is likely to stay below the radar at least until the control of Yahoo seems clear.
Moreover, some antitrust specialists and government officials said Google might tread carefully in opposing any deal since it could backfire.
Google dominates the market for Internet advertising, and to the extent it portrays the deal as encroaching on that dominance, it could help make Microsoft’s case that its acquisition of Yahoo would create a more competitive marketplace.
Lawmakers are responding to the takeover attempt. Rep. John Conyers (D-Mich.), chairman of the House Judiciary Committee, said he would hold hearings to examine any proposed deal.
And Sen. Herb Kohl (D-Wis.), who leads an important antitrust subcommittee, said he was interested in the proposed acquisition. “Should Yahoo accept Microsoft’s offer,” he said, “the subcommittee expects to hold hearings to explore the competitive and privacy implications of the deal.”
Google and Microsoft have the ability to wage a major political fight, the kind appreciated in Washington for the money it generates in lobbyist fees and political donations for lawmakers. Both companies began their Washington operations as one-man bands but now have large presences.
Moreover, the size and complexity of a Microsoft-Yahoo deal is such that a government review is unlikely to be completed quickly, particularly in an election year, and may not be final before a new administration takes office in 2009.
Should Yahoo finally agree to be acquired by Microsoft, a focus of the political and legal debate will be the products and markets that could be affected.
Microsoft has said the acquisition would increase competition in two related and large markets: Internet search and online advertising. Many ad-industry executives, who have watched Google’s rise with some trepidation, agree.